Factors That Determine Shipping Cost 28 September, 2022

Factors That Determine Shipping Cost

One of the many things we consider when shipping goods, whether for personal or commercial needs, is the cost. It makes an essential criteria that influences our shipping options. And with the recent global fuel price hike, shipping costs have soared, making it highly challenging to make shipping choices. This article will list down constituent elements that freight forward companies consider when calculating your shipping cost. 

Destination 

As you may have already guessed, distance is one of the significant determiners of shipping cost. Most shipping companies have standard shipping zones with a set price range, which makes it easy to understand the base cost depending on your desired destination. The further the gap between zones, the higher the shipping fees. Regarding the distance, there isn’t  much you can do here.

Weight or Dimensional Weight

The second most crucial factor that alters your shipping cost next to the destination is the goods’ dimensional weight. Weight-based pricing is usually straightforward; the heavier the packaging, the higher the shipping cost. 

On the other hand, dimensional weight pricing is based on the package’s length, height, and weight. Even if your package may be light, it can take a certain amount of floor or wall space, depending on the length and height. 

This is why choosing your packaging material and options very carefully is essential. By identifying the slightest details in your packaging, you can save on your shipping cost to a great extent. 

Tracking & Insurance

Usually, insurance and tracking are two essential considerations you need to make to offer more security to your goods. Tracking helps you keep an eye on where your goods are until they reach their destination. On the other hand, insurance covers the expenses in case your package gets lost or damaged.

However, these two functions come with a cost that directly adds to your shipping rates. But still, it wouldn’t be wrong to mention that tracking and insurance are two shipping features that are worth the extra cost, as it saves you from a lot of hassle. 

Customs & Duties 

These are inevitable costs when it comes to shipping across international borders. They also create a certain level of uncertainty, as extra fee charges vary from one country to another. 

In general conditions, the sender will have to pay the export duties, and the receiver will have to pay the import duties. And if the package contains any taxable items, the consignee will have to pay the applicable taxes to receive the package.

If you’re a business, include this information on the website or under shipping policies. Make sure to explain that taxes and customs duties are costs beyond your control and are something you will not earn a commission from. 

Delivery Speed

Under this factor, the quicker you want your package delivered, the higher the cost. Overnight shipments are usually possible in many countries, provided there are no issues when the goods clear customs. This is usually where shipping companies use concepts like express delivery. 

Fuel costs

Last but most importantly, shipping costs go up when fuel costs, especially diesel, are higher in a specific country due to taxes, market forces or other regional factors. When fuel prices drop, the shipping costs will also decrease accordingly. However, if fuel prices are volatile at a given period, your shipping company may set higher rates to protect itself against sudden fuel price hikes. 

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